Axios Media Trends

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February 20, 2024

Today's Media Trends, copy edited by Sheryl Miller, is 1,581 words, a 6-minute read. Sign up.

🏀 Situational awareness: Media execs flooded NBA All-Star weekend in Indianapolis amid a battle for NBA rights, per Puck's John Ourand.

  • "ESPN and Amazon are still considered shoo-ins for their packages. ... Turner executives also express confidence that they will renew a package."

1 big thing: 🤫 Scoop... Aryeh's secret fund

Photo Illustration of Aryeh Bourkoff with abstract shapes and money motifs.

Photo illustration: Allie Carl/Axios. Photo: Bloomberg via Getty Images

LionTree, the media advisory firm and merchant bank led by Aryeh Bourkoff, raised well over $1 billion in a new fund last year to support investments across media, entertainment, tech and gaming, sources familiar with the firm's efforts told Axios.

  • At least part of the fund includes Saudi backing, three sources familiar with the fund confirmed.

Why it matters: Media investing includes sensitivities around foreign ownership and control that make public disclosures more relevant, though they aren't always required.

  • LionTree hasn't typically disclosed who backs its funds in the past. The same holds for Allen & Company, another high-profile boutique investment firm with a strong media focus.

Zoom in: The fund includes more than a dozen limited partners, one source noted.

  • The firm has already begun to deploy capital from the new fund.
  • LionTree doesn't usually announce its investments, but some of the companies it backs will.
  • LionTree declined to comment.

Zoom out: In recent years, LionTree — which was founded in 2012 — has moved further into asset fund management in addition to its role as an advisory firm.

  • It has poured bigger checks into growth-stage companies as its asset management business expands.

Between the lines: Some new firms have been more forthcoming about foreign investment, but disclosures can sometimes lead to more public scrutiny.

  • Jeff Zucker's RedBird IMI — a joint venture between RedBird Capital Partners and Emirati-based International Media Investments — is facing a British government inquiry over its $1.4 billion bid to buy the Telegraph and the Spectator.
  • Peter Chernin's global production studio, North Road Company, has raised nearly $1 billion, including $150 million from Qatar's sovereign wealth fund.

The big picture: Saudi investments have become particularly polarizing in the aftermath of Jamal Khashoggi's murder in 2018.

  • Jared Kushner, for example, has been criticized for securing $2 billion from the Saudi Public Investment Fund after leaving the White House.

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2. Media dealmaking to rebound in '24

Global technology, media and telecom deal values and volume
Data: PwC; Table: Axios Visuals

Media dealmaking was slower in 2023 compared to the previous two years, but it's expected to ramp up in 2024, per PwC.

Why it matters: Advances in generative AI and more certainty around interest rates are expected to fuel more strategic partnerships and private equity investments.

Be smart: Dealmaking was stalled in part last year due to stalemates between digital media firms and potential buyers over valuations.

  • PwC notes that valuations of technology, media and telecom companies are often more sensitive to bank rates than in other industries, which in part led to that valuation gap.

3. Exclusive: NYT testing GenAI for ads

NYT

Photo: Thomas Trutschel/Photothek via Getty Images

The New York Times is recruiting partners to test new ad-targeting solutions using generative artificial intelligence (GenAI) beginning next quarter, executives told Axios.

  • It plans to make the new tool widely available to marketers in the second half of the year

Why it matters: The Times started working on these efforts long before it filed a landmark lawsuit against OpenAI and Microsoft for copyright infringement, executives said.

How it works: The new technology, which is being created internally at the Times, will deliver a recommendation for where an ad campaign could perform best based on its message or objectives.

  • The tool can also be used to target niche audiences that were previously unidentifiable based on their interests, aspirations and opinions.
  • For example, a car company looking to position itself as family-friendly might use the tool to align some of its messages with articles about technology and others to pet owners across the Times' site and app.

Between the lines: Brands themselves can't use the tool directly, but they can work with the Times' advertising team to apply it to their ad campaigns.

Zoom in: The Times is currently experimenting with multiple large language models (LLMs), including enterprise models and open-source models, to power the new tool, said Mohit Lohia, senior vice president and head of the Times' digital advertising mission. The tech, he added, would work using any LLM.

The big picture: More publishers are experimenting with ways generative AI can improve real-time ad targeting amid the broader industry pullback from third-party tracking cookies.

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4. ⚡ Walmart buys Vizio for $2.3B to boost ad biz

Share of U.S. digital ad spend, by company type
Data: Insider Intelligence; Note: E-commerce includes Amazon, eBay, Walmart and Etsy; Streaming includes TikTok, Hulu, Roku, Pluto, Tubi, Spotify, Pandora and iHeartMedia; Tech includes Microsoft, Yelp and Verizon/Yahoo; Social media includes Snap, Twitter, Pinterest and Reddit; Chart: Axios Visuals

Walmart agreed to acquire smart TV maker Vizio for $2.3 billion, in a deal aimed to boost the retail giant's ad business, Axios' Kerry Flynn and I write.

Why it matters: The agreement will make Walmart a major player in connected TV advertising, putting it in competition with Roku, Amazon and YouTube.

Between the lines: First-party data on customers' shopping habits is becoming more valuable to media networks amid increased competition in advertising.

Of note: Advertising is a higher-margin business for Walmart than grocery sales, which is why executives have said the company will soon make more profit from selling ad space across its digital and retail channels than from its brick-and-mortar sales.

  • The Vizio deal will help fuel Walmart's ad business, which grew 28% to $3.4 billion last year.

Be smart: Walmart is already one of the largest sellers of Vizio televisions, as previously reported by the Wall Street Journal. But owning the company would give it crucial access to the data from Vizio's smart TV operating system, which can expand its ad-targeting capabilities to connected television.

What to watch: While Amazon and Walmart battle for e-commerce sales, the former has a strong lead in retail media and other ad channels.

  • Amazon controlled 75.2% of the $45.15 billion U.S. retail media ad market in 2023, Insider Intelligence estimated. It's invested in growing its demand-side ad platform, which includes streaming TV ads in Prime Video and Freevee.

What to watch: Other nontraditional media businesses have also created their own ad networks.

  • Retailers like Target and Kroger and delivery apps like Uber and Instacart have captured ad dollars through their direct access to customer data and to consumers.

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5. 🎬 Sora comes for Hollywood

SORA

Image: Generated by OpenAI's Sora

OpenAI's Thursday unveiling of Sora, which turns verbal commands into remarkably lifelike movie clips, sent shockwaves through both the tech and media worlds, Axios' Scott Rosenberg writes.

Why it matters: Other firms have their own text-to-video tools, but OpenAI has upped the wow factor.

The big picture: Just as Dall-E raised the hackles of visual artists and ChatGPT triggered soul-searching (and lawsuits) by authors and writers, Sora is giving moviemakers thrills and chills.

  • It seems to promise profound shortcuts around expensive special effects and could upend many of the crafts that built Hollywood.
  • It also raises deep questions about the unique human contribution to artistic creation, the place of human actors and storytellers in visual media, and where future audiences will turn to find pleasure and surprise.

Yes, but: Most of us can't yet play with Sora.

  • The firm says it's making the tool available to select "visual artists, designers, and filmmakers to gain feedback on how to advance the model to be most helpful for creative professionals" — and also to "red team" researchers, who will assess "harms and risks."
  • Skeptics argued that OpenAI had cherry-picked its demo examples and that Sora's output didn't appear substantially different from that of Midjourney and similar tools.

Like each breakthrough in generative AI that preceded it, Sora summons an unholy trinity of problems: it could be violating creators' rights, it could flood the internet with misinformation and hate speech, and it hallucinates errors.

6. Paramount's paradox

Jon Stewart sitting behind the Daily Show desk

Jon Stewart returned to "The Daily Show" on Monday. Photo: Matt Wilson/Comedy Central

A month of huge ratings and box office wins hasn't been enough to convince investors that Paramount Global has a promising future.

Why it matters: Paramount's stock is down 13% since the start of the month. The company announced last week that it plans to shed 800 roles in an effort to streamline its business. Those cuts come amid increased pressure to sell or consolidate to pay down debt.

  • Paramount Pictures' Bob Marley biopic "Bob Marley: One Love" debuted at No. 1 at the domestic box office over the long weekend, exceeding expectations with a $27.7 million opening weekend and outperforming Sony's highly anticipated Marvel movie "Madame Web." Meanwhile, Paramount Pictures' "Mean Girls" crossed $100 million at the global box office. It's currently the second highest grossing film at the domestic box office for 2024.
  • Jon Stewart's return to "The Daily Show" on Comedy Central on Feb. 12 averaged more than 3 million viewers, up 129% from Trevor Noah's last show in late 2022. That created a halo effect, boosting ratings for the subsequent three shows that week hosted by Jordan Klepper.
  • Super Bowl LVIII was the most-watched television event in U.S. history, with more than 120 million viewers on CBS alone, marking the largest audience ever for an event on a single TV network.
  • The Grammys were watched by nearly 17 million people on CBS earlier this month, up 34% from the 12.4 million that watched last year.

7. 🗞️ College newspapers under threat

Illustration of a stack of newspapers with a siren on top.

Illustration: Aïda Amer/Axios

The majority (at least 56.1%) of student news outlets at colleges with more than 5,000 students get some sort of direct or allocated funding from their school, according to a new University of Florida study.

Why it matters: Direct and indirect university funds have increased amid a decline in advertising revenue, threatening the independence of student papers.

The big picture: College newspapers are increasingly filling the void for communities that have lost their local newspapers.

  • Last year, Stanford University student Theo Baker's stories scrutinizing the research of president Marc Tessier-Lavigne prompted the university leader's resignation and earned Baker a prestigious George Polk Award in journalism in 2022.
  • An interview by the Daily Northwestern detailing allegations about hazing by a former football player helped lead to the firing of the team's head coach, who is suing for wrongful termination.

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